The demand for rail transportation in North America is expected to increase significantly in the coming decades. Additional capacity will be required to accommodate the new traffic demand for both passenger and freight services. The majority of the network is single track with passing sidings, which trains use for meets and passes; therefore, allocating sidings properly can significantly increase line capacity and reduce train delay. Railroads usually rely on experienced personnel to determine new siding locations to improve line capacity through infrastructure upgrades. Experienced railroaders often identify good solutions; however, this method does not guarantee that all good alternatives have been evaluated or that the best one is implemented. In this research, an optimal siding location model is developed with consideration of infrastructure and traffic characteristics to determine the optimal number and locations of sidings. The empirical results demonstrate that this model is able to generate an optimal plan for the number of additional sidings and their respective locations. This tool can therefore help railroads maximize their return on investment from capacity expansion projects and achieve the service quality desired by customers.